Protecting Disbursements During Awarding

Packaging contains functionality that enables you to choose whether you want disbursed amounts to be protected when repackaging a student. When you activate disbursement protection, Packaging does not repackage an award below what has already been disbursed. To invoke disbursement protection, the award must meet four conditions:

1. The award is for a non-Direct Loan Financial Aid Item Type.

2. You indicate at the Financial Aid Item Type level—using the Disbursement Protection check box—that Packaging should protect the disbursed portion of an award.

3. The award's disbursement split code uses an even split option of either Even among first disbursements by term or Even across disbursements by term.

   If you do not use a split code with an even split option, the system does not observe disbursement protection. Instead, Packaging honors the split percentages defined by the specific Financial Aid Item Type and splits the award amount accordingly, which may result in one or more unequal disbursements.

   Any loan award, Direct Loan or Non-Direct Loan, with a custom loan fee is considered having a custom split, not an even split, and is, therefore, not subject to disbursement protection.

4. The award has one or more disbursed entries.

When disbursement protection is activated, the award cannot fall below the disbursed amount; however, you can still manually un-disburse the award if you feel a student is no longer eligible for the award.

When you modify a disbursement-protected award, Packaging recalculates the total disbursement amount for each term, using the entire new award amount (rather than the residual or difference between the original award and the revised award). This value is referred to as the term target amount. After the term target amount is determined, Packaging evaluates the even split option to determine how to split the award within the term. If disbursed amounts exist, Packaging checks to see if the disbursements are greater or less than the term target amount. If the disbursements are less than the term target amount, Packaging distributes to the term target amount while protecting the existing disbursed amounts. If the disbursed amount is greater than the term target amount, Packaging distributes the residual amount—total award amount less the disbursed amount—to the next term while protecting the existing disbursed amounts. Packaging then determines whether subsequent terms are partially disbursed or fully disbursed. If the term is partially disbursed, then the term target amount drives that term's distribution. If the term is fully undisbursed, then Packaging distributes residual amounts from fully disbursed terms into undisbursed terms.

If all disbursement IDs for the designated award period—determined by the packaging plan or the Award Period field on the award entry pages—are fully disbursed, then Packaging adds the residual amount to the last disbursement ID of the award period. If the designated award period is Both, Packaging adds the entire residual amount to the last disbursement ID of the second award period if the student's need for that award period is equal to or greater than the residual amount. If the student's need for the second award period is less than the residual amount, Packaging adds the amount of the student's need to the last disbursement ID of the second award period. It then adds the remainder of the residual amount to the last disbursement ID of the first award period. The following section provides examples of disbursement protection behavior when all of the designated award period's disbursement IDs are fully disbursed.

The even split option you choose—Even among first disbursements by term or Even across disbursements by term—and whether you have selected the Disbursement Protection check box affects how Packaging distributes the disbursements after an award increase or award decrease. The examples in the following sections demonstrate the possible combinations of even split options with disbursement protection turned on or off.

You cannot manually set the award amount to zero with an award action of B—Offer/Accept and have the Validation process return the maximum eligible award amount for a disbursement protected award. If you enter zero as the award amount, the Validation process returns the award with its original award amount and schedules disbursement valuation without making any changes. If you want the award amount to be zero (eliminate the award), then you must manually cancel the award by using the award action of Cancel.

In Auto and Mass Packaging, you cannot effectively reduce a disbursement-protected award to a desired amount because the award is generated by the packaging plan rather than you being able to enter a specific amount. Packaging first cancels existing awards that are not locked and do not have disbursed amounts. If a portion of the award has been disbursed, then Packaging reduces the award to the disbursed amount. For example, if, from an award of 1,000.00 USD, 500.00 USD has been disbursed and a rule exists to repackage the student, the system reduces the award to 500.00 USD. Packaging then creates new instances for the awards contained in the packaging plan. Packaging processes the second instance of the same Financial Aid Item Type independently of the first instance, and the award amount for this instance uses the aggregate, item type, and fiscal limits of that packaging rule to determine its maximum eligibility. However, the amount that has already been disbursed—preserved in the first instance—is added to the total award amount from the second instance. Continuing the previously given example, the student receives the 500.00 USD plus whatever additional award Packaging determines the student is eligible for. Therefore, it is impossible make a reduction when you repackage the student using Auto or Mass Packaging.

For example, a student has a 3,000 USD University Loan that has disbursement protection activated, with a disbursement plan (ID 15) that covers the institution's two semesters and uses an even split option of Even among first disbursements by term. The student also has a 1,000.00 USD Honors Scholarship that does not have disbursement protection activated, with the same disbursement plan as the University Loan but a split code—02—that distributes the award entirely in the first disbursement ID of the spring semester. You have already disbursed the fall disbursement ID to the student. The following table shows the scheduled disbursements. Disbursed amounts are in bold, and all amounts are in USD:

Then the student's need changes and you attempt to decrease the University Loan to 2,000.00 USD using Auto or Mass Packaging. The first step Packaging takes is to attempt to cancel all existing awards that are not locked. Neither existing award is locked; however, Packaging does not cancel the University Loan because a portion of the award has been disbursed and disbursement protection is activated. Packaging decreases the amount of the award to match the disbursed amount, and cancels the Honors Scholarship. Then Packaging inserts a new instance of the University Loan with an amount of 2,000.00 USD.

Because Packaging preserves the first instance of the University Loan—for the disbursed portion of the award—due to disbursement protection, as well as adding the second instance of the University Loan, the total award amount for the University Loan is increased to 3,500.00 USD (2,500.00 USD in the fall and 1,000.00 USD in the spring) instead of reduced to 2,000.00 USD. Additional examples of Auto and Mass Packaging behavior during award increases and decreases are in the following sections.

The following examples illustrate the behavior of disbursement protection when you have fully disbursed all disbursement IDs within a designated award period.

The following illustrates an example of the even split option, Even Across Disbursements by Term with disbursement protection turned off for a quarter-based institution with two disbursement IDs per term. The tables display the distribution of an original award amount and then an example of how the system distributes a decrease to an award.

The original award amount is 3,000.00 USD, the term target amount is 1,000.00 USD, and 500.00 USD has already been disbursed in the disbursement ID 01.

After the first disbursement for fall term, you reduce the award from the original award amount of 3,000.00 USD to 2,700.00 USD. The term target becomes 900.00 USD. The student already received 500.00 USD, but with disbursement protection turned off, the system recalculates the remaining disbursements to be 450.00 USD with a disbursement adjustment of 50.00 USD. When you run Authorization/Disbursement, the system adjusts the disbursement by 50.00 USD.

The following illustrates an example of the even split option, Even Across Disbursements by Term with disbursement protection turned on for a quarter-based institution with two disbursement IDs per term. The tables display the distribution of an original award amount and then examples of how the system distributes decreases and increases to an award.

The original award amount is 3,000.00 USD, the term target amount is 1,000.00 USD, and 500.00 USD has already been disbursed.

After disbursing disbursement ID 01 for fall term, you reduce the award from the original award amount of 3,000.00 USD to 2,700.00 USD. The term target becomes 900.00 USD. The following table shows how the system recalculates the disbursement for disbursement ID 02 to be the difference between the term target amount and what has already been disbursed for the fall term. The next disbursement ID for winter is also shown:

After disbursing disbursement ID 03 for winter term, you increase the award to 4,500.00 USD. The term target amount becomes 1,500.00 USD. The system first calculates a new term target amount of 1,500.00 USD per term. Because disbursement protection is turned on, the disbursements that occurred in ID 01, ID 02, and ID 03 remain protected. Also, because the fall term is fully disbursed for 900.00 USD, the term target amount of 1,500.00 USD cannot be met. As a result, this creates residual amount of 600.00 USD. This 600.00 USD residual is distributed among any subsequent fully undisbursed terms.

Because the winter term is a partially disbursed term where the existing disbursed amount is less than the term target amount, the system subtracts what has been disbursed (450.00 USD) from the term target amount (1,500.00 USD) and distributes the difference (1,050.00 USD) to the remaining undisbursed ID in the winter term.

Finally, moving to the spring term, because it's a fully undisbursed term, the system adds any residual amount from any fully disbursed previous terms (600.00 USD in this case) to the spring term target amount (1,500.00 USD) totaling 2,100.00 USD. The system then spreads this new term target amount evenly among all undisbursed IDs in the spring term.

The following illustrates an example of the even split option, Even Among First Disbursement for Term with disbursement protection turned off for a quarter-based institution with two disbursement IDs per term. The tables display the distribution of an original award amount and then an example of how the system distributes a decrease to an award.

The original award amount is 3,000.00 USD, the term target is 1,000.00 USD, and the first disbursement has been disbursed.

If you reduce the award to 2,700.00 USD, the term target amount becomes 900.00 USD. Because disbursement protection is turned off, the originally scheduled disbursement amount is recalculated to the term target amount of 900.00 USD with a disbursement adjustment of 100.00 USD. When you run the authorization and disbursement processes, the system adjusts the disbursement by 100.00 USD.

The following illustrates an example of the even split option, Even Among First Disbursements for Term with disbursement protection turned on. The tables display the distribution of an original award amount and then examples of how the system distributes increases and decreases to an award.

The original award amount is 3,000.00 USD, the term target amount is 1,000.00 USD, and the disbursement ID 01 of 1,000.00 USD has already been disbursed:

After disbursement ID 01 for fall term, you increase the award to 4,500.00 USD. The term target amount becomes 1,500.00 USD. The system determines the amount that the student receives in the remaining disbursements by awarding additional amounts up to the term target for the first term. In this case, 1,000.00 USD has already been disbursed for disbursement ID 01. The system schedules a 500.00 USD disbursement in disbursement ID 02 of the fall term. The fall disbursements now meet the term target amount. The remaining winter and spring terms are fully undisbursed with no residual overflow created in the fall term. Therefore, the system observes the term target amount of 1,500.00 USD.

After the disbursements for fall term, you reduce the award to 2,700.00 USD. The term target becomes 900.00 USD. The student has already received 1,500.00 USD for the fall term. This creates a shortage of 600.00 USD. The following table displays how the system recalculates the scheduled amounts for the terms. The system deducts the already disbursed amount of 1,500.00 USD from the new award amount of 2,700.00 USD leaving a difference of 1,200.00 USD. Because the winter and spring terms are fully undisbursed, the system splits the 1,200.00 USD difference evenly among both terms creating a new term target amount of 600.00 USD. Because the even split option is even among first disbursement for the term, only the first disbursement ID for each remaining term contains 600.00 USD.